Legal Framework and Formation Rules and Fees
The Isle of Man law of trusts is based on English law and is to be found in the following acts:
Trustee Act 1961
Variation of Trusts Act 1961
Perpetuities and Accumulations Act 1968 (adoption of the Hague Convention)
Recognition of Trusts Act 1988
Trusts Act 1995
Purpose Trusts Act 1996
Fiduciary Services Acts 2000 and 2005
In addition, being a common law jurisdiction, there is a considerable amount of case law (mainly English) which is persuasive authority for the Manx courts. The distinctions between English law and Manx trust law arise principally from the fact that the Isle of Man has not adopted certain provisions of English trust law, for example, those relating to restrictions on accumulation of income. Appeal from the Isle of Man courts is to the Privy Council in London.
Trusts do not need to be registered unless they involve real estate on the island, when settlements inter vivos must be registered, or are public, i.e. charitable trusts, in which case they must file annual audited accounts, and are subject to supervision by Her Majesty’s Attorney-General in the Isle of Man. There are no other statutory accounting or auditing requirements and there is no need to file tax returns. However, trustees are obliged by law to inform the Assessor when there is, or may be, an Isle of Man income tax liability. The Isle of Man Income Tax Department issued Practice Note 160/09 in October 2009 to provide additional guidance on the tax obligations of trusts.
It is possible to obtain an advance clearance from the relevant registry based on a draft trust deed so that the identity of the settlor and the beneficiaries can be kept totally confidential. The maximum perpetuity for Manx trusts is generally 150 years (80 years for a purpose trust). There are no provisions for non-recognition of foreign judgements. Asset protection trusts are not available; however, it has been established in law that if transfers are made honestly, they will stand up to future claims.
The Trusts Act 1995 secured the position of trusts established in the Isle of Man in the face of challenges in the applicable governing law by other jurisdictions, particularly in the area of 'forced heirship'.
Isle of Man News
IoM Consults On Funds Sector Rules Monday 22/5/2017The Isle of Man Financial Services Authority, which supervises the island's financial services sector, is seeking feedback on draft guidance dealing with the governance of collective investment schemes.